November 13, 2015

Millennials Are Buying More Vinyl Records

The entertainment
industry always loves a good comeback story, and music's latest resurgence is
no exception. Despite an explosion in digital and streaming music — including
Spotify, Apple
Music, Pandora and Tidal — consumers are spending more money on vinyl records,
and more vinyl buyers are millennials.

In 2014,
more than 13 million vinyl long-playing albums, or LPs for short, were sold in
America. And the first half of 2015 is showing similar sales strength with more
than 9 million LPs sold, according to the Recording Industry Association of
America.

The
association says the last time it has seen such high LP sales was a quarter
century ago, in 1989. At that time, nearly 35 million LPs were sold. Then in
1990, compact disc sales took off, and vinyl sales fell by the wayside.

The current
surge in LP sales is partly being driven by younger consumers. Industry
researcher MusicWatch reports half of vinyl record buyers are under
25, and men are more likely to buy LPs than are women.

"It's
definitely a bright spot for the business," RIAA's Josh Friedlander said
in a statement to CNBC. "In an increasingly digital age, vinyl records can
provide a deeper, tactile connection to music that resonates with some of the
biggest fans," said Friedlander, the association's senior vice president
of strategic data analysis.

LP
shipments increased 52 percent to $222 million for the first half of 2015,
according to the association. But that's still only 7 percent of the overall
market by value in a music industry dominated by digital and streaming sales.

The vinyl
demand is driving production at Independent Record Pressing in Bordentown, New
Jersey. The plant opened about 10 months ago and just launched production in
the past few weeks. The company wants to make more than a million records per
year.

Adding to
the overall spike in vinyl demand, the New Jersey location is among only a
handful of U.S. plants still making LPs.

"Our
demand far exceeds that," General Manager Sean Rutkowski said. "We
could run these presses 24 hours a day, seven days a week and still not be able
to meet demand. Capacity is really the choke point in the vinyl industry right
now," said Rutkowski, a music industry veteran of some 20 years.

Independent
Record Pressing has contracted with about half a dozen independent labels and
has four full-time employees.

The plant
machines are some 40 years old, and have been refurbished by Dave Miller, the
plant manager. Miller said the technology hasn't changed much at all in that
time. Each record takes about 25 to 40 seconds to make. The process includes
molding and heating vinyl up to 350 degrees and hitting it with about 100 tons
of pressure on the press. Each record is then listened to individually before
being packaged and shipped.

"It's
still heat and compression," Miller said. "Digital timers and things
like that have come into play, but really nothing has changed."

The
equipment's age, however, can sometimes be problematic. "When stuff breaks
you have to either redesign it and have it reworked or remanufactured,"
Miller said. And while
vinyl may be the contrary to digital, Rutkowski said digital music may be
adding to interest in LPs.

"Digital
strips out the tangibility of music. It really is just a file, and a record is
such a great tangible piece. It's something you can hold, something you can
touch, something you can listen to in a way that just putting something on your
computer doesn't [compare to]," Rutkowski said.

"I
think a lot of younger kids are just discovering vinyl. They were yearning for
something different, and it's sort of a badge of what they listen to."